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4th July 2014

Singapore Real Estate

High potential seen for
HPL's west Orchard assets

OCBC analyst says the properties are ripe for
revitalisation

Source: Business Times / Companies

HOTEL Properties Ltd (HPL) assets in West Orchard are ripe for
revitalisation and a future mega-development could play a central role in
remaking the area, according to an OCBC analyst report released yesterday.

In the aftermath of the HPL buyover last month by 68 Holdings, a
consortium led by Ong Beng Seng and Wheelock Properties, the report proposes
that there is a strong case for the future redevelopment of a large HPL-owned
site in the area.

The report estimates that 68 Holdings needed to secure access to
approximately $1.3 billion for its general offer. This significant capital
commitment combined with a five-year "break-up" clause for any of the
consortium parties in 68 Holdings' offer document suggests that the consortium
intends to form a majority controlling stake to implement future plans.

With no known supply additions to the Orchard retail space
pipeline from 2015 to 2017, rising retail rentals and a steady outlook for both
tourism demand and the domestic economy, prime retail rents in the area are set
to grow at 2 per cent per annum to hit $36.90 per square feet per month by
2017. Capital appreciation will also raise Orchard retail capital values to
$8,000 per square feet in 2017 from $7,000 in 2013.

For Mr Balaji Lakshmanan, the four-year wait for his new Housing Board
flat ended this week when he collected his keys. But another countdown began:
to dispose of his existing flat, as required under HDB rules. "I don't
know if I can sell this house within six months," he said, referring to
his three-room flat in Bukit Batok East.

Last Friday, the Housing and Development Board (HDB) announced its plans to rejuvenate Dawson Estate, whose transformation will include 3,700 new units that will serve as replacement flats for residents at the nearby Tanglin Halt estate.

These flats, completed more than 50 years ago, were among the first blocks in Singapore’s first satellite new town, Queenstown. Tanglin Halt estate held its 50th birthday bash in 2012 at Tanglin Halt Community Plaza. This is a location our pioneer generation can identify with: Its history from squatter houses to a well-planned township, with the cluster of 10-storey blocks of flats more popularly known as “chap lau chu” in Teochew and Hokkien, and the three-storey Singapore Improvement Trust flats.

Tanglin Halt Community Plaza is an open piazza, like a market square, bordered by the Commonwealth Drive Food Centre (three hexagonal blocks 1A, 2A and 3A) and three straight blocks of two-storey shophouses Blocks 46-1, 46-2 and 46-3.

The 58 tenants of these six blocks will need to move out of their hawker stalls and shops in seven years. The HDB plans to demolish Commonwealth Drive Food Centre, the shops and eating houses at Blocks 46-1, 46-2 and 46-3 and Block 39 at Tanglin Halt Road once the hawkers and tenants have relocated to a new food centre in Dawson. After this, a new neighbourhood centre, including a market and food centre, will be built on this site, creating a new community node for residents. Blocks 47 to 49 at Tanglin Halt Road will be cleared in 2024.

Commonwealth Drive Food Centre’s architecture comprises three connected hexagonal shapes joined like a honeycomb. While its shape may be considered unique, it is the whole environment that we should consider preserving. The food centre, also known as Tanglin Halt Food Centre, creates a market square that is Tanglin Halt Community Plaza when we include the three straight blocks of two-storey shophouses (Blocks 46-1, 46-2 and 46-3).

A market square is a feature of many old European towns. It is an open area where stalls open for business, sometimes on a particular day of the week or “Market Day”. A market square is usually surrounded by important buildings and offices such as a town hall, places of worship and a post office. Such market squares existed here in the past, in the old Kallang Airport, for example. Today, I can only think of a small market square in Commonwealth Crescent.

The HDB obviously feels there is a need for a commercial centre in this location and that is why it intends to rebuild this site into a neighbourhood centre. But perhaps they should simply renovate these six blocks, refresh their exteriors and allow the private sector to lease them, much like the buildings at Dempsey Hill.

Preserving these buildings will keep Tanglin Halt Community Plaza intact, allowing us to retain this historically identifiable market square, a familiar surrounding that is rich in more than half a century of history. Such a move will be in line with one of the key focuses of Master Plan 2014: To create community spaces that promote social bonding and interaction between neighbours and visitors.

The residents relocating to the five new neighbourhoods in Dawson are likely to be happy with the quality of their new homes and the fresh 99-year HDB leases. The new flats will feature lush landscaping with sky gardens for residents to enjoy panoramic views of Singapore’s city skyline. A complete array of amenities, with shops and social facilities such as childcare centres and a senior citizen centre, will be included.

However, as with most new HDB clusters, the ones in Dawson will be built with high density, with some blocks as high as 47 storeys. These clusters of towering blocks will give one a feeling of congestion at the lower levels. There will not be much distance between blocks.

Just like the current blocks at Forfar Heights and Commonwealth 10, while they will be attractive in the modern sense, they may feel clinical and lacking in nostalgic charm, with neither history nor heritage. Because none of the old buildings were retained when the area came under SERS, we do not recall the famous Forfar house, which in 1956 was Singapore’s tallest residential building.

The last few fragments of the original Tanglin Halt and Queenstown remain today. While SERS should be lauded, not everything that goes en bloc has to be demolished to make way for new developments. Policymakers should consider preserving the market square at Tanglin Halt Community Plaza by keeping all the six surrounding buildings and, thereby, saving for future generations a vestige of the Queenstown of the 1960s.

Fatal accidents in the construction sector here
spiked by more than 50 per cent, with 17 fatalities in the first half of this
year, up from 11 over the same period last year. Major injuries in the sector
also hit 71 in the first five months of this year, compared with 62 in the same
period last year.

Construction
boom affecting worker safety

Other reasons for safety lapses include fatigue from
working overtime and companies’ rush to finish jobs.

Source: Channel News Asia / Singapore

SINGAPORE: The construction boom and a shortage of workers to
handle demand could be among the reasons for a spate of safety lapses and
accidents in the construction sector, industry players have said.

Apart from fatigue from working overtime, they pointed to the
higher monthly foreign worker levies which have not only reduced the manpower
at companies’ disposal, but also contributed to a rush to finish jobs in order
to keep a lid on project costs – potentially compromising workers’ safety.
Other reasons include new workers’ unfamiliarity with the job.

The Manpower Ministry said on Thursday (July 3) there were 17
construction-related deaths in the first half of the year. The figure includes
eight fatalities in January alone and is an increase from the 11 fatalities
during the same period last year. The number of incidents with major injuries
in the first five months also jumped 15 per cent from the same period last year
to 71.

Asked about possible reasons behind safety lapses, Singapore
Contractors Association (SCAL) president Ho Nyok Yong pointed to the boom in
construction demand, which he believes would match the historical high of
S$35.8 billion last year.

Speaking at SCAL’s Construction Safety, Health and Security
Campaign event on Thursday, which was held to recognise industry efforts to
make worksites safe, Dr Ho said many developers request for their projects to
be completed earlier, putting pressure on contractors. Any job that is rushed
into will affect the safety of workers, he said, adding that new workers are
always arriving in Singapore and some may not be used to working at heights.

The figures prompted Senior Parliamentary Secretary for Manpower
and Education, Mr Hawazi Daipi, to call for “urgent and serious action” to
improve the situation. “If the trend continues, I am afraid we may end the year
with a higher fatality and major injury rate than in 2013,” he said in a speech
at the event.

Last year, there were 33 fatalities in the construction sector –
the top contributor to workplace injuries.

In May, construction firms told TODAY about challenges to meet
project deadlines with limited manpower, which had led to project delays
despite overtime work into the night in some instances.

Having workers work into the night could cause fatigue, said SC2
general manager Loh Yeow Leng, who has been auditing the safety measures of
construction firms for the past 15 years. “When you are less alert, sometimes
even (when) walking on flat ground, you can easily trip and fall. (Regardless
of) how well the housekeeping is, there are always chances of trips and falls,
which can easily cause quite a serious accident,” he said.

Most of the construction projects, such as condominiums and
train stations, are within built-up areas and work could be stopped on weekends
to reduce noise levels. This further reduces the time available to complete a
project, Mr Loh said.

Another contractor, who wants to be known only as Mr Pereira,
said higher worker levies make project delays costlier because workers – whose
levies are renewed monthly – have to stay longer on-site. This puts stress on
contractors and workers to speed up the construction.

Some workers, under pressure to complete a project quickly,
could meddle with things they are not trained to handle, such as cables
providing power to a worksite, he said.

Unison Construction managing director Tan Soon Kian said the “majority
of projects” in the industry are always done in a rush, but also pointed out
that working hours in the construction industry are shorter than a decade ago.
He has also observed from the latest tenders that developers are willing to
accept longer durations for construction.

He noted that while the MOM already has a framework on worker
safety, contractors sometimes underestimate the amount of time needed to
conduct risk assessment.

“They may think this piece of work can be finished in half a
day, but preparation for all these risk assessments may take a longer time and
all these may cause problems,” he said, adding that such an attitude must
change.

Member of Parliament for Bishan-Toa Payoh GRC, Mr Zainudin
Nordin, who is Chairman of the Government Parliamentary Committee for Manpower,
said government agencies, contractors, developers and workers must work
together to improve the situation, making sure workers are aware of their roles
and do not get into dangerous situations.

“People have been talking about needing more workers, so I can
understand. But whether it is directly related to performance or the workers or
the lapses, we don’t have a direct correlation ... I think it is better for us
to not speculate,” he added.

The MOM has stepped up enforcement efforts since January, with
more than 1,600 inspections, covering close to 850 companies in the
construction sector, conducted to date.

In April, the ministry launched Operation Peacock, which found
280 safety violations in 15 days. Four full Stop-Work Orders and 178 fines
totalling more than S$110,000 were imposed.

Pre-leasing deal signed for 52% of space a year
ahead of mall's completion

Source: Business Times / Property

[SINGAPORE] Mapletree Investments' first shopping mall in Vietnam
has attained pre-leasing commitment for more than half its net lettable area
(NLA), way ahead of its scheduled opening in the first half of next year.

SC VivoCity, located in District 7 of Ho Chi Minh City, was
jointly developed by Mapletree and Saigon Co.op Investment Development Joint
Stock Company (SCID), an affiliate of Vietnamese retailer Saigon Co.op, at a
cost of US$100 million.

The joint venture company between Mapletree and SCID, called
Vietsin Commercial Complex Development Joint Stock Company (VCCD), inked
agreements with 13 retailers yesterday.

These retailers will occupy around 21,300 square metres or 52 per
cent of the mall's 41,000 sq m NLA. They include South Korea's largest
multiplex cinema chain CGV, BreadTalk and Starbucks. Co.opXtra, a hypermarket
by Saigon Co.op and NTUC Fairprice, will anchor SC VivoCity.

At least six firms have acquired
land and are building residential developments in the special economic zone now

Source: Today Online / Business

SINGAPORE — A challenging property market in China is driving many
developers in Asia’s largest economy to scour for better returns in alternative
destinations, with Malaysia’s Iskandar special economic zone featuring heavily
on their radar.

At least six Chinese companies have acquired land and are building
residential developments in Iskandar at the moment, market watchers said. A
major appeal of the special economic zone is its proximity to Singapore, a
regional business hub with a ready pool of potential buyers.

“They have started to venture out of China because financing is
being tightened. It’s becoming difficult for developers to get funding, and
sales are not moving. Generally, things look quite bad for the real estate
sector. It’s probably more of a push factor than a pull factor,” said Mr Colin
Tan, director of research and consultancy at Suntec Real Estate Consultants.

“Developers usually go for ‘safer’ markets such as Hong Kong or
Singapore, which are developed and more transparent. But Iskandar is in a
unique position even though it’s not a mature market. It’s next to a First
World country, with tremendous purchasing power for developers to tap, and land
cost is low compared with developed markets.”

China has spent more than four years trying to rein in record
housing prices amid worries of a bubble. Last month, new home prices fell for a
second consecutive month after expanding for almost two years, the China Real Estate
Index System Survey showed. Sales of new homes also fell 23 per cent in the
first half of this year, compared with a year ago.

The slowdown has resulted in developers becoming more cautious
over splurging on land and committing to new projects. As a result, land sales
in 300 cities plunged 29 per cent on-year in the second quarter.

“There’s enough large-sized plots in Iskandar, and payment terms
for such plots are probably more favourable to the developers than in
Singapore,” said Mr Ku Swee Yong, CEO of real estate agency Century 21.

Chinese developer Country Garden is developing a 22ha land with
9,000 residential units at Danga Bay in Southern Johor and has another project
in the pipeline that may entail a land area of “a few thousand acres”.

One of the newest entrants to the Iskandar property scene is
R&F Properties, which is reportedly building 30,000 residential units
across a 47ha site in its first venture outside China. Around 800 condominiums
of the first phase of 3,200 units at its Princess Cove project are expected to
go on sale later this month.

R&F has said it expects to see robust sales despite recent
measures by Malaysia to cool the market. Foreigners are now allowed to only buy
properties priced above RM1 million (S$390,000) and are subject to a higher
real property gains tax (RGPT) of 30 per cent if they sell their homes within
five years of purchase. After the fifth year, they have to pay a 5 per cent
RGPT.

“I believe the measures have made buyers more selective. They’re
taking more time to decide where they want to invest,” said an R&F
spokesperson. “But our development’s best selling point is its location. The
company sees a lot of potential in Johor Baru, especially with the state
government’s commitment to refurbish the area.”

However, analysts are taking a more conservative stance on
Iskandar’s potential. “I think people are aware of the potential oversupply
situation. The common argument against this is that Iskandar has the backing of
the government and that the high-speed rail (will) project improve
connectivity, so its potential will eventually be realised. But the next
question is, how long will that take? It could well be many years,” said Suntec
Real Estate’s Mr Tan.

Quarter-on-quarter growth of 336% aided by award
of 2 extra large contracts

Source: Business Times / Malaysia

MALAYSIA'S construction companies registered one of their
strongest quarters for contract awards when they won a total of RM7 billion
(S$2.7 billion) in contracts in the April-June period.

This puts the sector on
course to surpass the RM15.4 billion worth of contracts achieved for the full
year 2013.

The 336 per cent quarter-on-quarter growth was aided by the award
of two extra large contracts - one of RM2.8 billion for the West Coast
expressway to IJM Corporation and another of RM994 million for the Langat 2
water treatment plant to the Salcon-MMC-AZRB consortium.

With RM8.6 billion on hand at the half-way point, analysts think
there is sufficient momentum to propel the sector past last year's total given
the number of sizeable highways and high-rise jobs in the pipeline.

AllianceDBS Research said that these include three highways with a
combined value of RM11 billion, the controversial RM3 billion Warisan Merdeka
project which includes a skyscraper of over 100 storeys, and the RM1 billion
Four Seasons Hotel.

These projects can attract financing that may not
otherwise be available: consultant

Source: Business Times / Property

[LOS ANGELES] Rainer Viete, who visits Florida from Venezuela
about once a month, said he's buying an apartment at the Hyde Resort &
Residences hotel-condo project near Miami so he can order a meal or rent out
his apartment when he wants.

"I love the amenities the building will have - a restaurant
that can provide room service, a concierge, maintenance, a person that can
clean your place, valet parking," said Mr Viete, 25, who works for his
family's real estate company in Caracas. The US$250 million project, scheduled
to break ground in August, is already 85 per cent sold.

Developers across the US are reviving a concept that collapsed
with the real estate crash in 2008: combining condos and hotels.

In cities including Miami, New York and Los Angeles, a rebounding
hospitality market is joining rising demand for luxury homes, spurring
developers to build full-services hotels and ask premium prices for residential
units associated with a high-end brand.

[TOKYO] Mitsubishi Estate Co's bonds gained the most in Japan this
year on expectations of a windfall from the 2020 Tokyo Olympic Games for the
nation's biggest developer.

The 2 per cent return compares with a 1.9 per cent increase for
Central Japan Railway Co, the second-best performer, and a 0.8 per cent average
for Japanese corporate bonds, Bank of America Merrill Lynch (BOAML) index data
show. Sovereign debt advanced 1.56 per cent and companies worldwide gained 5.34
per cent.

The International Olympic Committee forecasts Tokyo's first summer
games since 1964 will attract 152 billion yen (S$1.85 billion) in investment
into the capital's properties. The nation's top three developers, including
Sumitomo Realty & Development Co and Mitsui Fudosan Co, reported the
highest combined annual profit since 2008 as Prime Minister Shinzo Abe's
stimulus programme boosted land prices in Japan's three largest metropolitan
areas for the first time in six years.

"Expectations for the 2020 Tokyo games are driving the buying
of real estate companies' bonds," said Mana Nakazora, the chief credit
analyst in Tokyo at BNP Paribas SA. "Investing in the Olympics has become
synonymous with investing in the real estate sector."

Centerbridge Partners LP is leading a lawsuit against CWCapital Asset Management LLC claiming that it is being cheated out of hundreds of millions of dollars in the takeover of New York’s Stuyvesant Town-Peter Cooper Village.

CWCapital, which has managed the 11,000-unit apartment complex since 2010, was sued by junior-level lenders today over its seizure of the property last month. Centerbridge controls the six limited liability companies named as plaintiffs in the complaint filed in New York State Supreme Court in Manhattan, said two people with knowledge of the matter, who asked not to be identified because the information is private.

The six are mezzanine debt holders, whose positions behind the more senior lenders were wiped out when CWCapital took title to Manhattan’s largest apartment complex on June 3, the person said. CWCapital, which represents holders of a $3 billion defaulted senior mortgage, exercised a deed in lieu of foreclosure, canceled an auction and indicated it will put the property up for sale.

Litigation between holders of the junior and senior debt may slow progress toward a permanent owner for the complex, whose tenants have been seeking to buy and keep its apartments affordable. The future of the community has been in limbo since 2010, when Tishman Speyer Properties LP and BlackRock Inc. defaulted on their mortgage in one of the most high-profile deals to collapse in the real estate crash.

‘Unjust Windfall’

CWCapital engaged in “a continuing pattern of misconduct designed” to keep control of the property and “reap an unjust windfall” of $1 billion that should go to lower-level lenders who have received nothing, according to the complaint.

Ross Lovern, a spokesman for New York-based Centerbridge with Kekst & Co., declined to comment.

CWCapital said in a statement today that it complied “in every way” with the underlying documents and that Centerbridge purchased its position after the deed-in-lieu agreement had been recorded.

“The claim filed by Centerbridge today is nothing more than a speculative litigation play which attempts to reap a windfall at the expense of the bond holders we represent as well as the tens of thousands of New York City residents who are seeking stability for their community,” CWCapital said.

Walked Away

Tishman Speyer and BlackRock purchased the complex for $5.4 billion in 2006, taking out $1.4 billion of mezzanine debt and a $3 billion senior mortgage that was carved up and packaged into bonds. The owners walked away from the property in January 2010 after plans to raise regulated rents were thwarted and the financial crisis sent property values tumbling.

Manhattan real estate prices have since rebounded. Private-equity firm Fortress Investment Group LLC (FIG), which owns Bethesda, Maryland-based CWCapital, had been seeking financing for a potential $4.7 billion bid on the complex, a person familiar with the matter said in May.

The lenders alleged in today’s complaint that CWCapital’s takeover was “executed on the flawed premise that the amount owed on the senior loan was greater than the value of the property.” CW represented that $4.4 billion was owed on the mortgage when the amount was really $3.45 billion, the lenders said.

“Far from being underwater, had StuyTown been sold at market value, it would have fetched a price high enough that more than one billion dollars would have been left over the correct mortgage amount to repay the junior lenders whose loans remain wholly unpaid,” according to the complaint.

Seeking Damages

The plaintiffs are seeking damages that they believe to be “up to $1 billion or more,” and the appointment of a judge-monitored trust which would oversee how the future of the property is resolved.

The suit also names commercial-mortgage trusts set up by Wachovia Bank, which San Francisco-based Wells Fargo & Co. (WFC) acquired in 2008. Wells Fargo isn’t a party to the suit.

Stuyvesant Town-Peter Cooper Village, located between 14th and 23rd Streets along the East River, is home to more than 30,000 residents. MetLife Inc. (MET) built the property in the 1940s with city assistance to house returning World War II veterans.

Annual income at the 80-acre (32-hectare) community has climbed by $54 million since Tishman Speyer and BlackRock walked away from their investment, according to Amherst Securities Group LP.

The case is PCVST Mezzco 4 LLC v. Wachovia Bank Commercial Mortgage Trust 2007-C30, 652045/2014, New York State Supreme Court, New York County (Manhattan).

For African building laborer Mamadou Diallo, Portugal (PTGDPQOQ)’s success in attracting investors to its real-estate market is laced with bitter irony.

The 38-year-old Guinean said he has lived in the country for the past seven years, working in different construction projects and paying his taxes. That hasn’t been enough to gain residency in Portugal. Yet for a buyer of a property worth more than 500,000 euros ($682,000), the kind Diallo helps build, a visa can come with the purchase deeds.

“If I had half a million euros to buy a house all my problems would be over,” Diallo said in fluent Portuguese during an interview in downtown Lisbon. “This is so unfair.”

Fair or not, the practice has been heralded by governments in southern Europe as a much-needed boost to economies trying to put the continent’s financial woes behind them. While Malta drew the attention of the European Union this year after introducing a program effectively selling citizenship, it’s Portugal that has been attracting the most new residents.

The country issued 1,161 visas since its program began in 2012, representing 699 million euros of investment mainly from China, Portugal’s Foreign Ministry said this week.

In Spain, 72 visas were issued to non-EU property investors in the country, El Pais newspaper reported on May 17, citing data from the Department of Immigration. Greece granted 100 visas, according to Interior Ministry figures. Both countries started their visa programs last year.

Luxury Homes

“There’s little doubt the golden visa program has been successful in promoting the sale of luxury houses in Portugal,” said Jose Brandao de Brito, chief economist at Banco Comercial Portugues SA in Lisbon. “The problem is that most of the assets that need to be sold are cheaper apartments on the periphery of cities that are empty because of high unemployment.”

Opposition to the programs may bring together unlikely political bedfellows: anti-immigration parties, which won unprecedented support in May’s European Parliamentary elections, and organizations championing the rights of immigrants.

Timoteo Macedo, president of the Immigrant Solidarity Association in Lisbon, runs a group with 25,000 members spanning 97 different nationalities. He estimates it can take as long as seven years for an immigrant to be granted a resident permit to live in Portugal as many struggle to hold a steady job. That compares with less than six months for an investor who acquires a golden visa, he said.

Modern Apartheid

Some of the association’s members have survived journeys on overcrowded boats to travel from northern Africa to southern Europe. The number of illegal border crossings into Europe on the central Mediterranean route more than doubled to 40,304 last year, according to Frontex, the European Union’s border agency.

“The golden visas are the worst apartheid in modern history,” Macedo said this week. “These golden visas are granted to first-grade immigrants, while the poor, hard-working immigrants who risk their lives to come to Europe are ignored.”

The visa enables someone to live in Portugal and travel freely within the EU. After six years, they can apply to get a maroon EU passport from Portugal.

In Malta, it’s more about the money than any sale of assets, with a contribution of 650,000 euros to a fund for development and social spending leading to a passport.

Market Boost

Portuguese Economy Minister Antonio Pires de Lima has lauded the program for its effect on the property market in a country that was forced to seek an international bailout in April 2011, exiting it this year. Portuguese home prices rose 4 percent in the first quarter from the same period a year ago, the biggest increase since at least 2010, the National Statistics Institute said on July 1.

“Portugal’s golden visa program is a success and has resulted in a substantial investment to the country’s real estate sector,” Pires de Lima said at a Portugal-China Chamber of Commerce event on May 27. “Foreign investors have participated enormously.”

Mamadou Diallo says he builds all kinds of houses including the type “that rich people live in.” He has two sons, age 7 and 11, back in Conakry, the capital of the west African nation of Guinea, to whom he sends money whenever it’s possible.

“It’s very hard to live here because I hardly make enough for myself,” said Diallo, who lives in a small apartment in Lisbon that he shares with his girlfriend.

EU Concern

The European Parliament in January approved a non-binding resolution that said EU citizenship should not have a “price tag” attached to it. The document expresses concerns about programs adopted by some member states that “directly or indirectly” result in the sale of EU citizenship.

“The system in Portugal is very similar to that in virtually all other EU countries,” Carlos Coelho, a EU parliament member from Portugal’s ruling Social Democrats, said in January. “There is no privilege clause for those carrying out investments. If you are a foreign investor or a foreign migrant the rules are exactly the same when it comes to acquiring Portuguese nationality.”

The progress of anti-immigration parties such as Marine Le Pen’s National Front in France and Nigel Farage’s U.K. Independence Party in elections in May is likely to increase pressure on the EU to tighten immigration rules, said Jelena Dzankic, a research fellow at the European University Institute.

“I assume there will be tighter rules on immigration or at least pressure on member states,” Dzankic said. “It’s going to be interesting to see whether some of these EU parties will make a difference between ordinary immigrants and those with money.”

Chinese Interest

Canada scrapped its Immigrant Investor Program this year, citing “limited economic benefit” to the country. That helped bolster demand for real estate in EU members offering the so-called golden visas, according to Alystair Kung, an associate general manager of Chinese real estate consulting firm CBIEC in Lisbon.

Kung estimates that about 20,000 Chinese investors who were applying for a visa to Canada will now turn to EU countries such as Portugal, where adverts for homes on billboards have been translated to Chinese. About 80 percent of Portuguese visas so far went to Chinese nationals, according to the Foreign Ministry figures.

“Europe is a new popular destination for Chinese citizens to move to,” Kung said in an interview. “Most of these Chinese want a golden visa so they can travel in the EU and end up renting their properties for most of the year.”

Sunken Boats

Edmund Zhao, a Chinese national who bought a 700,000-euro apartment near Lisbon last year, got a Portuguese residency permit in nine months. It enables him to travel freely within the EU and doesn’t require him to live in Portugal.

“It all happened so fast,” Zhao said in a phone interview from China. “I plan to move there with my wife soon.”

To avoid getting deported, Diallo, the construction worker from Guinea, said he carries a paper slip in his almost empty wallet to prove he is still applying for a resident permit to live in Portugal after more than seven years.

He considers himself lucky. In October, two boats carrying migrants sank a week apart off Lampedusa, Italy, killing more than 400 people. Last month, more than 5,000 migrants on boats were rescued by the Italian Navy, the Navy said in a statement on June 30. About 30 bodies were found in one of the boats.

“I have friends that have died trying to cross the Mediterranean,” said Diallo. “This has to end.”

CWCapital Asset Management LLC was sued by lenders claiming they are being cheated out of hundreds of millions of dollars in the takeover of the Stuyvesant Town-Peter Cooper Village, Manhattan’s largest apartment complex.

CW, which has managed the 11,000-unit development on bondholders’ behalf since 2010, took title to the property June 3 by exercising a deed in lieu of foreclosure. CW canceled an auction and indicated it will put the complex up for sale.

CW engaged in “a continuing pattern of misconduct designed” to keep control of the property and “reap an unjust windfall” of $1 billion that should go to lower-level lenders who have received nothing, according to the complaint filed today in New York State Supreme Court in Manhattan.

The lenders, under names such as PCVST Mezzco 4 LLC, asked a judge to award unspecified compensatory and punitive damages. The suit also names commercial-mortgage trusts set up by Wachovia Bank, which San Francisco-based Wells Fargo & Co. (WFC) acquired in 2008. Wells Fargo isn’t a party to the suit.

Tishman Speyer Properties LP and BlackRock Inc. (BLK) purchased the complex for $5.4 billion in 2006, taking out a $3 billion mortgage and $1.4 billion of mezzanine debt. They defaulted on the senior mortgage in 2010, after the financial crisis and the thwarting of their plans to raise rents.

Fortress Bid

Private-equity firm Fortress Investment Group LLC (FIG), which owns Bethesda, Maryland-based CW, had been seeking financing for a potential $4.7 billion bid on the complex, a person familiar with the matter said in May.

Michael Goodwin, a spokesman for CW, didn’t immediately respond to a phone call requesting comment on the suit.

The lenders alleged in the complaint that the takeover was “executed on the flawed premise that the amount owed on the senior loan was greater than the value of the property.” CW represented that $4.4 billion was owed on the mortgage when the amount was really $3.45 billion, the lenders said.

“Far from being underwater, had Stuy Town been sold at market value, it would have fetched a price high enough that more than one billion dollars would have been left over the correct mortgage amount to repay the junior lenders whose loans remain wholly unpaid,” according to the complaint.

Stuyvesant Town-Peter Cooper Village, located between 14th and 23rd Streets along the East River, is home to more than 30,000 residents. MetLife Inc. (MET) built the property in the 1940s with city assistance to house returning World War II veterans.

Annual income at the 80-acre (32-hectare) community has climbed by $54 million since Tishman Speyer and BlackRock walked away from their investment, according to Amherst Securities Group LP.

The case is PCVST Mezzco 4 LLC v. Wachovia Bank Commercial Mortgage Trust 2007-C30, 652045/2014, New York State Supreme Court, New York County (Manhattan).

U.S. mortgage rates for 30-year loans fell for a third week, reducing borrowing costs as housing demand regains strength.

The average rate for a 30-year fixed mortgage was 4.12 percent this week, down from 4.14 percent, Freddie Mac said in a statement today. The average 15-year rate held at 3.22 percent, according to the McLean, Virginia-based mortgage-finance company.

Home purchases are accelerating after a slow start to the year.Contracts (USPHTMOM) to buy previously owned U.S. houses climbed 6.1 percent in May, the biggest monthly gain since April 2010, the National Association of Realtors said this week. Strict credit standards are holding back some buyers who may want to take advantage of the drop in loan costs from the beginning of 2014.

“Housing is on a slow recovery path with credit conditions being crucial to the outlook,” Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, said in a July 1 note to clients. “Real estate lending is picking up but far from booming.”

Mortgage applications fell for a fifth time in six weeks, the Mortgage Bankers Association said yesterday. The group’s purchase measure decreased 0.7 percent, while the refinancing gauge advanced 0.1 percent.

The average rate for a 30-year loan was 4.53 percent in early January, according to Freddie Mac.

Job growth is helping to bolster housing demand. U.S. employers added 288,000 workers in June and the jobless rate fell to 6.1 percent, almost a six-year low, Labor Department figures showed today.